AGRICULTURAL ECONOMICS

ASSIGNMENT

TOPIC:

The movie Peepli live reflects one of the main problems faced by the
farmers of rural India.
Highlight any other problem/obstacle faced by farmers in any part of
the world. Support your research with data and a case study.














PANKTI SHAH




The basic right to food is deprived to one out of every seven human beings in the
world today. Out of the majority of the worlds poor who depend on agriculture as their
chief source of income, 75 percent of them are small scale food producers, the most
vulnerable of all who cope with problems like climate change with least capacity and at the
same time produce almost all of the worlds produce. Issues like climate change over the
years have had both direct and indirect impact on the agricultural sector. Emphasizing
further on smallholder farming, it is the foremost agricultural activity in most of the
developing countries. It has been observed that globally, there are about 500 million
smallholder farms and there have been substantial changes in the economic, social and
political conditions that have both adversely and positively affected these farmers.
Problems like low investments and degradation of productivity, climate change, inadequate
support of state and institutions have put up a constraint on the smallholder sectors,
restricting them from become the engine of growth. However, in the recent years relief
agencies, private financial institutions, NGOs and other organizations have emerged as
important players in order to support small farms. But it is seen that these organizations do
not work together in a coordinated manner, thus making many small farms victims of the
incoordination.
In the 1990s, Russia undertook an alternative approach by keeping its large farms
together under private instead of government control. Though this resulted in certain
inefficiencies in the Soviet Union, recently Russian farms have witnessed an increase in
productivity, courtesy the new management standards and operating policies. In the world
agricultural markets, the importance of the Russian Federation has grown significantly
especially after 2000, on both supply and demand sides. The major developments noticed
were the country becoming a large grain exporter and a considerable increase in the
agricultural imports. However, climate changes and extreme weather conditions have
become common in Russia of late, causing hindrances in agricultural production and lower
productivity for farmers. Certain key difficulties like livelihood crisis and food security
problems were faced by small scale farmers in the country due to climate variations and
absence of adaptive policies.

The summer drought of 2012, which came right after the devastating drought of
2010, is proof enough for the trend showed above. As per the Federal Service for
Hydrometeorology and Environmental Monitoring the year 2012 saw an increase in the
number of unprecedented climatic events
1
. From May to June 2012, the country saw a 65
percent increase in the number of extreme weather conditions as compared to the same
period in 2011
2
. What seems surprising is the vulnerability and unpreparedness of the
Russian agricultural sector, to face these weather fluctuations. Statistically speaking, in
2012, officially 22 regions suffered crop losses, and a state of emergency was declared in 20
of these. The losses incurred were significant in number: the years gross grain harvest was
24.7 percent lower than in 2011 (94.2m tonnes), at 70.9m tonnes. Apart from grains the
agricultural sector saw a decline in productivity for sunflowers, sugar beet, vegetables and
potatoes
3
.
The above mentioned crop losses had majorly two negative socio-economic effects
on the Russia agriculture:
The social impact of food price volatility, like the prices of grain and bread hit the
roof, has had negative social impact on the poor in the country.
The losses have resulted in indirect and direct economic impairment to farmers in
the affected areas, making many farmers bankrupt and farms unprofitable.



Even with prices of grain climbing sharply, only a few farmers could actually benefit
from the same since most of the small farmers did not have much to sell. Also most of them
had already sold their grain in autumn, when the prices were substantially low, before the
prices shot up in winter. Another reason why farmers could not make enough profits was
due to the fact that the increase in prices of grains were not proportionate to the price of
agricultural inputs. With prices of fodder also rising, farmers with livestock lost even more
due to high grain prices, whereas the price of meat remained stable.
Though some farmers were capable of coping with losses and a few of them even
benefitted from the high grain prices, a lot of them faced crop losses. These losses resulted
in adopting some coping strategies, which further weakened their pliability.
The losses resulted in unemployment of laborers on the farm. The farmers had to
fire the workers or offer them unpaid leave since they did not have enough money
to pay salaries and not due to less work on the farm.
In order to continue functioning, farmers turned to take loans from banks and other
financial institutions. But due to the credit history of a certain farmers, they could
not get their loans sanctioned and thus had to turn to credit co-operatives for the
same. These credit cooperatives gave loans to farmers at a higher interest rate than
banks, hence making it challenging for them to repay.
Lastly, farmers had to reduce the size of their cultivable land and sell or slaughter
livestock in order to reduce costs of labor, water, agricultural inputs and fodder
respectively.
From the above mentioned problems and challenges faced by farmers, better
support from the State would make it easier for them to function and earn a living. As per a
survey conducted by Oxfam and its partners from February to March 2013, the only
message that the farmers tried to get across through Oxfam, was efficient state support to
all the farmers. Support from the State includes:
The compensation given to farmers should be more sustainable, predictable and
moreover should correspond to the losses incurred.
The system of subsidies should be made more certain, such that in conditions like
extreme weather fluctuations, farmers can be sure of attaining support from the
State.
Lack of information and red tapism are major obstacles in receiving subsidies for
small and medium sized farms, who have poor human resources and
administrative capacity. The State needs to look into this matter, and design the
system in such a way such that small farms can gain access.
In concluding, the drought of 2012 and all others before that have reduced
production in Russia by 25 percent, increased food prices and caused economic damage to
farmers in 22 regions, and this series of events is becoming increasingly common in the
country. This requires immediate attention to devising a coherent, comprehensive and
specific adaptation policy to weather fluctuations more urgent.
REFERENCES
1
Federal Service for Hydrometeorology and Environmental Monitoring of the Russian
Federation (ROSHYDROMET) (2013) Report on the specifics of climate on the territory of
the Russia Federation in 2012, Moscow: ROSHYDROMET,
http://meteorf.ru/upload/iblock/606/%D0%94%D0%BE%D0%BA%D0%BB%D0%B0%D0
%B4%20%D0%BE%20%D0%BA%D0%BB%D0%B8%D0%BC%D0%B0%D1%82%D0%
B5%20%D0%A0%D0%A4%20%D0%B2%202012.pdf
2
Ministry of Agriculture of the Russia Federation (2012) On current situation in the
agricultural sector of the Russia Federation in September 2012,
http://www.mcx.ru/documents/document/v7_show/20406.285.html
3
Agency for economic information (PRIME) (2013) ROSSTAT ascertained the data of
grain crops in the Russian Federation in 2012 70.9m tonnes,
http://1prime.ru/Agriculture/20130312/761710858.html
4
Purchasing prices of meat in 2013 decreased because of new regulations related to Russias
WTO accession. See, for example, http://vrn.kp.ru/daily/26063/2972086/